Call to change first home owner grant

WE were recently negotiating with a buyer on a five-year-old property when well-meaning friends whispered in his ear that he was missing out on $20,000 from the Government’s First Home Owner Grant by buying established, instead of building a new home.

Now, in one sense, that is correct. By purchasing an established home the buyer did not qualify for the grant. However, when we broke down the numbers, outlining all costs associated with building in Townsville and compared them with the deal we were negotiating, the numbers told a different story.

To buy a block of land and build a home similar to the one we were negotiating, the cost would have been $530,000. Deduct the $20,000 that the grant would have provided and the cost came to $510,000. Based on similar recent sales in the area the price of the home being negotiated was $460,000, representing a dollar saving of about $50,000, not to mention the time and hassle saved from going through the building/construction process!

This case highlights the situation throughout most of regional Queensland – homes are so affordable that you can buy an established home for cheaper than you can build, at the moment. The State Government continues to ignore the REIQ’s recommendation to include established homes in the First Home Owner Grant eligibility criteria, at least in regional Queensland where the market needs as many buyers as possible.

An additional point to consider is that a first homebuyer in regional Queensland won’t have to borrow as much when they buy a more affordable established home. This means they will have a buffer in the event that rates rise. This is an important consideration with a recent report suggesting a half a percentage point rise in interest rates could result in thousands of homeowners becoming mortgage-distressed.

The grant is designed to help create jobs through the construction of new homes. However, as my anecdote illustrates, regional Queensland is not using the grant. Why would we? Established homes are cheaper and easier!

As we head into a State election, it’s worth remembering that if the State Government was truly interested in helping young people get their foot on the property ladder they would help them no matter what type of home they wanted to buy – established or new.

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